OnStartups

Here is a hypothetical conversation that might have happened (but didn't) with some
high falutin’ person at Microsoft on the whole Don Dodge thing.

Imagine a scene where I’m sitting in a Seattle coffee shop having a
clandestine meeting with the Microsoft individual that was involved in the
recent, highly publicized departure of Don Dodge. (If you don’t know anything
about this topic, you can get caught up with this TechCrunch
article and it’s 200+ comments).

Dharmesh: How could you allow Don Dodge to quit Microsoft?
Seems someone wasn’t working hard enough to keep him happy.

Me: Choking on my decaffeinated coffee (which turns out does
actually contain some caffeine, enough to keep me up at night, which I don’t
really need any help with). What!? Why the heck would you do that?

CHMP: Well, it was part of a much larger reduction in
workforce event.

Me: Um, ok, but weren’t there tens of thousands of
Microsofties that weren’t let go? Why wasn’t Don one of those people?
Seems if things were completely random, there’d be a higher probability that
he’d wind up in that bucket instead of the “let go” bucket.

CHMP: Well, it wasn’t really random. It’s not like we
pulled names out of a hat. At Microsoft, random is a 6 letter word. In any
case, we actually put him on the list to let go.

Me: Oh, I see, so you’re really saying that the whole
notion of attracting developers onto the Microsoft platform — particularly
getting startups on board while they’re still young and impressionable is no
longer a strategic priority.

CHMP: Well, I wouldn’t quite put it that way. We’re still
all about “developers, developers, developers”.

Me: And you don’t think that Don was helping out enough in
terms of putting a semi-tolerable face on Microsoft? Do you have a sense for
how much discussion has been going on in the blogosphere now talking about how
stupid this move was?

CHMP: Well, in our defense, all of the recent fall-out from
his “departure” happened after the event. We couldn’t possibly have
known that Michael Arrington and a bunch of other high-influence people would
react so negatively. We figured, hey, we’re letting a bunch of people go. This
is one of them. It’s a bad economy and all that…

Me: So, you didn’t consider the PR impact at a time when
you can use all the positive PR you can get? You didn’t know that Don had a
blog, or that you paid him to fly around the country and evangelize and build
these strong connections in the tech industry?

CHMP: As I said, we couldn’t have known that the response
was going to be so negative.

Me: And, what about the fact that he got hired by Google.
And that he’s now switching to Google products — and writing about it. This
can’t be sitting well with you.

CHMP: Well, yeah, we’d prefer that he had not gone over to
one of our arch rivals. In fact, Google is the last place we wanted him to wind
up. And in terms of his switching to Google technology, he’s just one user,
we’re solving for the “long term”.

Me: So, let me get this right: You had him on the list to
let go, you knew he had reasonably strong brand and a community of followers
(including some high-level folks) and you knew that Google was high on the list
of places that would likely recruit him.

CHMP: Yes, that’s kind of right. But, we didn’t KNOW that
the PR cost was going to be so high.

Me: And what about the whole Boston thing? Wasn’t it kind
of nice to have a well respected, likable guy that was singing Microsoft’s
praises in the second-largest tech startup area in the world? Don’t you think
it’s going to hurt your “long term plans” to lose some of that mojo?

CHMP: Ok, between you and me, we were idiots. In the whole
grand scheme of things, Don wasn’t that much money. A mere rounding
error in the PR and evangelism budget. And it’s not like there were 50 people
like him running around at Microsoft. He had some unique value, some great
connections and did an exceptional job evangelizing Microsoft while still
maintaining credibility (and dignity). That’s not easy to do. And yes, we knew
there was the risk Google would recruit him — they’ve been known to do some
smart things. And yes, we’re kicking ourselves now because from a business
perspective, Don was accretive. But, let’s talk about the real reason this all
happened. Given infinite time, we could have likely figured out that this was a
bad decision. But, realize that we’re Microsoft. We’re big. We can’t afford
to analyze each individual decision like this. Thing of it as the price one
pays for selective focus. You can fault us all you want, but hindsight is 20/20
and foresight is expensive.

[end of scene]

—-

This brings me to the startup moral of the story. You should be investing
considerably in your team. If someone is profitable (creating more
value for the company than they’re costing you), then there’s only reason to
ever let them go: Their “payback” period is longer than your cash resources
will allow. Said differently, they’re great, and they’re going to make you
money, but you can’t afford to keep them. That’s a legitimate (and often
common) situation.

You should also factor in the the likely outcome of letting someone go.
Think through the likely scenarios. One additional high-level question I often
ask myself that is looking to leave: Would I rather this individual work for
me, or my strongest competitor? If I want them on my team, I fight hard to keep
them.

What do you think about assessing the value of members of your team? Do
startups tend to over-estimate the competitive risk of an employee leaving? Do
we make mistakes in terms of choosing who to let go when it’s necessary to do
so? What do you think?

Rajat

Interesting blog post! Is your next book going to be a play? ;)

I had another very talented friend get fired from Microsoft the same day as Don. Maybe to help its PR image, Microsoft decided to play Talent-Santa Claus for the rest of us?

Well-played scene; so true that the "longterm impact of the PR fallout" can get kicked under the carpet when analyses are made in the short term. Foresight -is- expensive. Few firms place sufficient value on foresight to retain the rare futurist, relying instead on phrenologists and tea-leaf scryers to keep the ship from foundering too far off its purported course.

Most big companies are reliant on one (or, in Microsoft's case, a few) multi-billion dollar products. There is Windows, there is Office, etc.

If you're stuck in 10-year flat stock (like Microsoft), you need another multi-billion dollar product. A bunch of incremental growth isn't going to do you any good. Was Don Dodge's employment going to bring or help that multi-billion product?

I think that Xbox is where their focus is. All the good PR in the world isn't going to help them, especially when that PR isn't related to Xbox: they need Xbox to blow away Playstation again in the next round. (For those PS3 fans, I'm talking sales, not technical merit.)

Everybody, including Office and Windows and MSN Live (and, yeah, even non-Xbox developers), are on skeleton crew. They want to let Xbox hire and build what they need, rather than foist other "good people" from other parts of the company on them.

Nothing personal against Don Dodge. He seems like a good egg.

Ollie Jones

News flash: Microsoft's future profitability is 100% with serving IT in large organizations. Their Vista goofup had the unintended but happy consequence of weaning them from sales of $100 products.

They have a strong enough lead in that field, right now, that reaching out to startups is a waste of money and a distraction from their core mission. The most a small startup business is going to buy from them is a universal MSDN subscription or two. They'll buy those anyway. In a low-growth world why spend money developing a market like that?

Louis

If I may play devil's advocate here - with all due respect to Don Dodge, I wondered at the time if the outcry in the blogosphere was fair to all the other Microsoft people who lost their jobs. Don's role as Evangelist was important yes, but was it necessarily more important than every one of those other jobs that were lost.

Don't get me wrong I a fan of Don's totally agree that it was a bad idea for MSFT to let him go but a part of me can't help thinking that the outcry by bloggers smacks a bit of their sense self-importance. In fairness to MSFT also, is there any evidence that their image was actually being helped as a result if Don's work? I think it is quite obvious that Microsoft didn't think so.

Robert

Is it at all possible that we (the outsides) don't have all the information here? Maybe Don was a pain in the ass, or maybe there was some other baggage that we don't know about...

This sort of short sighted own goal is so depressing. Personally I blame Micrsosoft's obsession with Management by Objection - I suspect that Don hadn't done as well in the metrics as others in his team despite the much wider impact he'd had in reality.

Good one Dharmesh - when I interviewed Don for the Startup Success Podcast he was not at all bitter: in fact, I got the distinct feeling he felt Microsoft had done him a favor. (a favor they are going to regret...)

It's worth noting Don is not just Switched to Google, he's Switched to Apple. It's hard to underestimate just how deep the shock goes when you you make the Switch.

As for why Don is a Big Thing:

a) He was one of a very few Microsoft employees who had as one of the almighty quarterly objectives promoting adoption of Microsoft's stack by "breathe ISVs" - startups (funded and self-funded)